Mr. Ash Guglani reports

NEXE INNOVATIONS ANNOUNCES QUARTERLY Q3 2024 FINANCIAL RESULTS FOR THE THREE-MONTH PERIOD ENDED FEBRUARY 29, 2024

Innovations Inc. has released its financial results for the three-month period ended Feb. 29, 2024 (Q3 2024). Nexe has a strong focus on creating sustainable alternatives to reduce plastic pollution and is delivering significant progress through its flagship product -- the Nexe pod, a BPI-certified compostable coffee pod.

In Q3 2024, Nexe continued to work with potential business-to-business (B2B) customers. Nexe is engaged in several discussions with coffee companies of various sizes. These companies have tested various samples, conducted their due diligence and engaged in discussions with their end-customers, including grocery chains and on-line distributors, to help forecast demand and contractual details.

During the quarter, Nexe's founders also attended B2B conferences, including a large private-label conference (ECRM) in Jacksonville, Fla., and the Specialty Coffee Expo in Chicago, Ill. Our management believes that the target market received the Nexe pod well, which has led to several leads and discussions.

"We believe our position within the market is not just strong; it's strategic and forward-thinking. With a tested, BPI-certified compostable product and a fully integrated production facility where we craft our own resin, we are setting a new standard in sustainable production," stated Ash Guglani, president and co-founder of Nexe. "As a start-up that is bringing a disruptive product to the market, there was a more involved education and validation process as part of the sales cycle with our initial customer conversations. We expect these timelines to improve as we refine our approach. However, due to the calibre of the partners we engage with, the process will naturally remain thorough and a typical sales cycle will take months."

Highlights:

The company believes it is a leader in the compostable coffee pod space. Both Keurig and Nespresso are investing in developing sustainable alternatives for their coffee pods. Keurig still needs to beta test its product and will require consumers to purchase a new machine. Nespresso has a more paper-based product, which it has piloted in Switzerland and France, and differs greatly from the Nexe pod. Nexe is one of the few hard-bottomed, fully enclosed pods certified compostable by a third party -- the BPI Institute. Nexe believes it is positive for the coffee market and consumers that the largest players are also starting to invest in alternatives to plastic and aluminum. Given the size of the market, there is an opportunity for many players to compete. The company believes Nexe will be a strong competitor in this market, given its vertically integrated operations and strategy, and that the Nexe pod will be price competitive compared with the traditional plastic/aluminum offerings. The new non-plastic version that is expected to be introduced by Keurig is likely to be priced at a premium.

In Nexe's view, the company is well ahead of the competition with its fully operational, vertically integrated facility in Windsor, Ont. Nexe is excited about the conversations it is engaged in and has been working with some well-established U.S. companies to develop product offerings using its Nexe pod technology. The company believes the fundamentals for the business remain strong and it has a strong financial position to execute the business plan, particularly:

• Nexe has a strong cash position to execute its strategy over the next two years. At the end of Q3 2024, the company's total cash position was $10-million (including GICs (guaranteed investment certificates) and term deposit). Nexe is also expected to receive cash proceeds of at least $5.0-million, in the event a purchaser agrees to acquire our non-core asset, the Surrey facility.
• Nexe has minimal debt. The current debt outstanding is $752,187, related to a government loan. Nexe's commitments at the end of the quarter were $1.7-million and minimal capex is expected over the next two years.
• The book value per share at the end of Q3 2024 was 36 cents (based on outstanding shares of 97.3-million), including 10 cents per share of cash.

Fiscal Q3 2024 results

During the three months ended Feb. 29, 2024, the company had a net loss of $1,136,209 or 1.2 cents per share, compared with a net loss of $1,252,477 or 1.3 cents per share for the comparable period last year. The change in net loss was predominantly a result of the following:

• Revenue was $24,927 (Feb. 28, 2023 -- $7,129) and cost of goods was $38,556 (Feb. 28, 2023 -- $16,735). The cost of goods included non-cash expenses, such as depreciation related to production machinery and equipment. Depreciation in cost of goods sold increased as new equipment has come on line.
• Selling, general and administrative expenses decreased to $696,566 (Feb. 28, 2023 -- $974,147) due to lower overhead costs, lower consulting fees and lower compensation. The company benefited from consolidating operations to the Windsor facility. The management team continues to maintain a disciplined approach to allocating resources.
• A non-cash share-based compensation expense of $97,021 (Feb. 28, 2023 -- $152,319) was recorded for stock options granted to directors, officers and employees.
• Interest and accretion expense decreased to $43,169 (Feb. 28, 2023 -- $62,630) as a result of declining balances of the government loan and elimination of the lease liability.
• Interest income increased to $253,094 (Feb. 28, 2023 -- $195,181) primarily from the GIC deposits.
• Depreciation increased to $435,358 (Feb. 28, 2023 -- $214,135) due to additional equipment purchased.
• Research and development expenses increased to $101,004 (Feb. 28, 2023 -- $29,497) as the company continues to develop new technology and formulations.

Nexe has a working capital of $14.5-million, commitments of $1.7-million and a strong balance sheet to help it execute its plans over the next two years. Management continues to be very disciplined in managing its financial position.

The company's Q3 2024 financial statements and related management's discussion and analysis are available on Nexe's SEDAR+ profile and the company's website.

About Nexe Innovations Inc.

Nexe is focused on providing innovative compostable material solutions and packaging to the B2B segment to help businesses achieve their sustainability goals. Nexe has developed a proprietary and patented compostable material that can withstand heat, pressure and water. Its flagship product, the Nexe pod, a BPI-certified compostable coffee pod, showcases the durability of Nexe's material and is an ideal substitute for plastic. The Nexe pod is compatible with major coffee brewing machines and is manufactured at Nexe's vertically integrated facility based in North America.

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